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Daily Deals Trend: Card-Linked Offers

  |  July 22, 2011   |  Comments

BuyWithMe and others challenge Groupon's supremacy.

The digital deals space - Groupon, LivingSocial, Google Offers, Facebook Deals, KGB Deals, Bloomspot, etc. - is starting to resemble a reversed version of the old schoolyard football game "500." But instead of a mob of people trying to catch a single offer, there's often a mob of offers being simultaneously lobbed at a single person. And for industry observers, all the activity in the space can be equally overwhelming.

But two trends appear to be emerging that could help simplify and define the deals space: card-linked deals and alternative platforms.

Amex and Facebook on Tuesday unveiled the "Link, Like, Love" app, which among other things, will allow users of the credit card to redeem deals without a paper coupon or help from the cashier or wait staff once they're enrolled in the program. And last month, Amex partnered with Foursquare to present coupon-less specials to users of the geo-social platform.

Both the Facebook and Foursquare offers execute similarly. If Amex cardholders spend $75 at H&M, for instance, they will receive a $10 credit. Amex has been piloting a similar program with Scvngr at a Levi's store in San Francisco.

Competing credit card giant Visa has also gotten into the deals game. It has been running a test with Gap since the holidays, where Visa sends mobile offers to card members when they visit the retailer's locations. Users must opt in before receiving the location-based pitches.

Deals platform BuyWithMe on Monday announced it purchased card-linked loyalty provider Edhance. Now BuyWithMe subscribers can tie in their loyalty and credit card accounts with the deals platform. They'll be able to redeem deals with their credit cards while racking up, when applicable, rewards points. In addition, BuyWithMe says its merchant partners can now get ROI analytics that show how well different kinds of offers perform.

Also, Groupon recently inked a deal with Big Y, where the supermarket chain integrated daily deals into its loyalty card system. The New England retailer ran deals for a seafood package ($40-for-$24 value) and porterhouse steaks ($20-for-$10) during two separate weeks in June. Purchasers could use their loyalty cards at one of Big Y's 59 locations to redeem the deal.

ClickZ News asked Harry Kimball, Big Y database marketing director, about the potential surrounding daily deals and loyalty cards. "I think it's still early stages," he said. "It seems like customers are interested. Customers like the ones we've put out there."

Scoutmob and Wantsa Present Alternative Models

Scoutmob differentiates from Groupon, LivingSocial, and other daily deals sites because it doesn't ask the consumer to purchase a voucher. Viewers can simply click on the special - 50 percent off in almost all cases - and have it delivered to their cell phone via a text message. They can then redeem the offer by showing it to the participating merchant on their phone.

scoutmob3In essence, Scoutmob is a digital coupon distribution firm that focuses on an urban, young demographic. It's live in 13 markets and plans to add seven more U.S. cities soon. Each market involves a four-person sales team and an editor who writes local content for the city's page and email newsletter copy. Scoutmob has approximately 675,000 email subscribers, while 225,000 iPhone/Android users have downloaded its app.

Most interestingly, unlike most daily deals sites, the New York-based company doesn't use revenue-sharing merchant agreements. Instead, said Michael Tavani, Scoutmob co-founder, it charges a flat fee "in the $3 to $4 range" when a subscriber redeems an offer at a restaurant, bar, or shop.

"Ultimately, what this is…is advertising," he said. "From the merchant perspective, the way we look at it, we might drive a couple of thousand people over the course of three months."

Meanwhile, Wantsa and Loopt have recently launched so-called deal exchanges that allow consumers to request specials from local merchants. For example, rather than a restaurant offering 50 percent off, consumers find a specific eatery via the platforms' digital directories and then ask for a deal. Both programs utilize a "tipping point" strategy, where consumers are encouraged to rally friends to also request the deal in order to get the local business to oblige.

Virgin America was the first brand to partake in Loopt's u-Deals initiative after enough consumers requested a special. The airlines offered $100-for-$35 (65 percent off) for flights to or from the San Francisco International Airport. Five-hundred vouchers were offered, and they sold out in a few hours.

But what deal models will win out? Tavani of Scoutmob said, "It's a very noisy space…I think in the next year-and-a-half there's going to be a lot of changes. Not just from us, but from everyone in the space. A lot of people are trying to figure out, 'What's the next phase for this? Is it payment? Is it gamification? Is it location-based stuff?' There are some interesting things happening."

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Christopher Heine

Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.

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